So long (distinctive) Notre Dame economics

For many years Notre Dame had a “heterodox” economics department known for approaches that were less rosy on laissez-faire policy and formal modeling methods than your typical econ department. A few years ago the university created a conventional econ department alongside the heterodox department. Now it is closing down the old heterodox department and spreading the faculty among sister departments.

Even though I’m an economic sociologist (and thus by definition think conventional economics leaves out a lot of interesting stuff about markets and exchange), I think overall Chicago style economics has a more accurate and parsimonious model of exchange than does the style of economics that we can no longer associate with Notre Dame. Nonetheless even though I don’t agree with many of their models and conclusions, I think it’s unequivocally a shame both for economics as a discipline and Notre Dame as an institution that a department providing a distinctive perspective has been turned into yet another second-tier conventional department.

First, what this means for economics as a discipline. The development of ideas come out of meaningful intellectual diversity, especially when there are viable circles where people who have novel ideas can bounce off of each other. So long as the departure from the discipline’s dominant paradigm is not truly ridiculous (e.g., a biology or geology department known for young Earth creationism), I think it’s healthy for the field to have a few circles that break from the consensus.

Second, for Notre Dame as an institution. Notre Dame is embracing the strategy of middle-range conformity and this strikes me as a bad idea. Let’s take it as granted that there is no way that Notre Dame economics is going to crack the US News or NRC top 10 in the medium-term. If so, it seems like Notre Dame is better having a deviant but distinctive department than a conventional department without any reputation at all (in the Zuckerman “focused identity” sense). This is the exact opposite of the famous GMU strategy to raise up their third-tier law school and econ department into the top half of the second-tier by developing a high profile and distinctive identity by emphasizing “law and economics” and the Austrian school. This was incredibly successful and managed to put GMU on the map (and raise the profile of these ideas, see point #1). GMU administrators describe their strategy as “moneyball,” meaning they found a niche with a lot of unappreciated and underpriced faculty talent, but I think of equal or greater importance was that they created a very focused and distinctive identity. [See the Crooked Timber book symposium on Rise of the Conservative Legal Movement for some very interesting thoughts on this].

The only way it could possibly benefit Notre Dame is in undergraduate education, if we feel (plausibly but not certainly) that undergraduates benefit from learning the conventional theories and (plausibly but not certainly) that most high school seniors aren’t aware of the specific intellectual reputations of specific departments. However if undergraduates know broadly what to expect of an institution (perhaps because Catholic universities are known for embracing the church’s “social doctrine” of center-left economic policy) then they’ll understand what they are signing up for and I think it’s good that they have the option of choosing an unconventional economics education.

Finally, I think it’s ironic that conventional economics assumptions of perfect information and free competition make a more plausible case that Notre Dame should keep a heterodox econ department (for reasons of undergrad pedagogy) than do the heterodox assumptions of bounded rationality and captive audiences. On the other hand, heterodox econ and econ soc are much better at predicting that Notre Dame would conform to disciplinary conventions.